Groupon Inc (NASDAQ:GRPN) took its shareholders on a wild ride today. The company’s stock is up by more than 8% at time of writing, and stock has been rising pretty evenly throughout the day after a big jump right after the market opened this morning. The reason for the company’s jump could be linked to a Morgan Stanley report that came out this morning.


The report, which was authored by Morgan Stanley analysts Scott Devitt and Stephen Shin, put a price target of $14 on Groupon Inc (NASDAQ:GRPN) and rated the company at Buy. According to the report Groupon shares look undervalued heading into the company’s earnings report for the third quarter. The social deals company is set to report its numbers for the three months next Thursday.

Groupon earnings

The Morgan Stanley report highlights the recent performance of Groupon Inc (NASDAQ:GRPN) stock as support for its optimism. The analyst says that the 19% loss in the company’s value in October give the company a positive risk/reward ratio on earnings.

The analysts are looking for earnings per share of one cent on revenue of $619 million for the three months. Those numbers don’t matter all that much, however. What matters is how cheap the stock has gotten, based on their analysis, and the reaction of the stock market to good billings in the United States and growth around the world.

The analysts are so confident in their valuation of the stock that they assert it could rise even if the headline earnings numbers come in below expected in the September quarter earnings report. That seems less likely after today’s 8% bump in the value of the stock, but given the price target the firm puts on Groupon Inc (NASDAQ:GRPN), they are confident there is room to grow.

Groupon stock spike

The jump in the value of Groupon Inc (NASDAQ:GRPN) today won’t make up for some of the losses absorbed by longtime holders of the stock, but it will be a comfort to new investors. Groupon has more than doubled in value this year, but it is still trading for much less than its IPO price.

Shares in the discounter went into a fall immediately after going public, and they didn’t show signs of recovery until the end of 2012. Groupon Inc (NASDAQ:GRPN) earnings, due on Thursday, will provide an interesting trading opportunity.